Macau, an autonomous region of China situated 65 km west of Hong Kong, is the international king of gambling towns. Last year, revenues for its 30-plus casinos totaled $33.5 billion, more than five times those of Las Vegas. Only in recent months has the global financial gloom started to dent the territory’s gaming intake, which at times has grown 70% annually. Still, record turnover is expected again this year. These phenomenal numbers would seem to suggest that Las Vegas Sands, Wynn Resorts and MGM Mirage — the big American players that entered Macau after the former Portuguese colony liberalized its gaming industry in 2002 — have hit the jackpot. But don’t bet on it.

The U.S. operators went into the gambling enclave on short 20-years-or-less gaming licenses with no guarantees of renewal. They are reliant on mainland-Chinese punters for business, which in turn puts casinos at the mercy of Beijing’s immigration controls (mainlanders need a travel permit to visit Macau) and currency restrictions (mainland visitors can only take just over $3,000 with them). This also forces them to compete for the lucrative custom of high rollers — responsible for as much as 70% of revenue — brought to Macau by infamously shady promoters known locally as “junkets” after the lavish gambling sprees they organize. Even more worryingly, allegations of improper, and in some cases illegal, conduct in the territory are coming back to haunt — and potentially hurt — U.S. operators on their home turf. Tough domestic anti-money-laundering laws and Nevada gaming-license controls can be revoked for malpractice in foreign jurisdictions, making Macau something of a poisoned chalice.

To be successful in Macau, casino operators need to establish the right connections both locally and in the mainland. Efforts at cultivating this guanxi are at the root of the problems now facing the American firms there, with the U.S. Department of Justice and the Securities and Exchange Commission currently conducting probes into whether Wynn Resorts and Las Vegas Sands have violated the Foreign Corrupt Practices Act.

In both cases, what began as internal company squabbles evolved into lawsuits containing explosive allegations — and the subsequent federal investigations. At Wynn Resorts, after a falling out with its CEO Steve Wynn, onetime business partner Kazuo Okada accused the company of seeking preferential government treatment in return for a $129 million donation to the University of Macau. In turn, Wynn Resorts, which denies the charge, alleged that Okada made improper payments to Philippine gaming officials, leading to his removal from the board on the grounds that he was an “unsuitable person.” At Sands, Steve Jacobs — a fired former chief of its China division — claimed in a civil suit that the company made inappropriately large payments to a Macau attorney-lawmaker and allowed a figure named in a Hong Kong court as a triad boss to be actively involved in running one of its VIP rooms. Las Vegas Sands, headed by leading Republican donor Sheldon Adelson, also denies any wrongdoing; neither Wynn Resorts nor Sands has been charged with a crime.

MGM Mirage also finds itself facing fallout. It beat a shamefaced retreat from New Jersey after regulators there deemed its Macau business partner Pansy Ho — daughter of gambling tycoon Stanley Ho, who once monopolized Macau gaming — “unsuitable” in a scathing 2010 report. It reportedly may now be facing similar difficulties in its plans for an $800 million casino project in Maryland.

Macau “is a money launderer’s dream, among other things,” claims Jeff Fiedler, director of special projects at the U.S.-based International Union of Operating Engineers, which represents a small contingent of American MGM casino workers. “And Macau is definitely beginning to leak into the U.S. — that’s really corrosive.” In February, Fiedler spearheaded the launch of a website “dedicated to shedding light on areas of the Macau gaming world that industry stakeholders … have worked to keep out of the public eye.” Based on court and corporate records, U.S. congressional investigations and media reports, the website — CasinoLeaks-Macau.com — has since produced a steady stream of posts alleging widespread criminality among junkets. With most of a casino’s profits coming from the high rollers that junkets supply, American operators have “no alternative” but to rely on them, says Bruce Kwong, an academic at the University of Macau’s Department of Government and Public Administration. “Take [the junkets] away — who helps you to bring those rich men to gamble?”

Many junkets — who arrange flights, hotels and, most importantly, credit — have been dogged by allegations of involvement in organized crime, or association with triads. Macau gaming regulators — known by its Portuguese acronym DICJ — acknowledge past junkets-related triad violence (the late 1990s saw rival gangsters wage war against one another on the city’s streets) but say they now have a handle on the problem. A junket-promoter law introduced in 2005 requires promoters to apply for a license every year and includes background and suitability checks, as well as financial disclosures. The Macau authorities have also launched intermittent crackdowns in coordination with counterparts in Hong Kong and mainland China. Earlier this month, they detained 150 people in raids at casinos and hotels following a recent spike in violence that stoked fears of a revival of the troubles of the ’90s. But not everyone thinks the triads — with up to 30,000 members in Macau by some estimates — have disappeared from the junket scene. “While their names are not on the front door, the guarantors or who’s close to them are triads,” says Steve Vickers, who runs a Hong Kong–based risk consultancy.

Indeed, the problem is that the junket system, which long predates the arrival of the Americans in Macau, is needed more than ever. Since Beijing outlaws gambling adverts, junkets recruit wealthy players. They provide debt collection on the mainland, where gambling debts cannot be enforced in courts. And they circumnavigate China’s tightfisted cross-border currency controls. In short, they are the oil in an otherwise inoperable engine. “Casinos try to be respectable — that’s where the junkets come in,” says a Hong Kong police officer who has investigated mainland China’s money laundering that is linked to Macau. “You can’t enforce gambling debts in mainland China, so you need someone to break legs.”

China is unlikely to loosen the controls that might eventually reduce the need for junkets. Beijing is worried that liberal currency regulations “would damage the mainland monetary system, with all the money running out of China,” says the academic Kwong. That means there is little prospect that these promoters — or the unsavory characters often associated with them — will go away. This has led some to wonder whether the strict policing that American operators are subject to simply makes them incompatible with Macau.

“If [U.S. operators] are being monitored by the standard in the States, they wouldn’t be able to operate here,” says Hoffman Ma, a leading Macau casino investor and himself a licensed junket promoter. That could force U.S. companies to choose between East and West. Las Vegas Sands, Wynn Resorts and MGM Mirage have all declined to comment, but Frank Fahrenkopf, president and CEO of the American Gaming Association, insists that the three operators will honor the conditions attached to their U.S. gaming licenses. “There’s no question the companies know that if they violate rules and regulations outside of Nevada, they’re subject to penalties,” he says. “And I don’t see these companies willingly walking away from the state of Nevada.”

Others disagree and argue China’s rising wealth, as well as the willingness of rival global operators to swoop in given any chance, makes Macau indispensable to the U.S. companies. “It may come to a point that many are listed [in Asia] rather than [in the U.S.],“ speculates Vickers. “I think money talks.”

Besides, the biggest threat may not even come from U.S. regulators. It’s interesting to speculate how much longer the Chinese Communist Party will tolerate the eye-popping profits generated by the American companies on Chinese soil, in part from errant mainland officials who squander huge sums of misappropriated public money on weekend gambling binges. “No government wants to see investors making 40%, 50%, 60% returns in their country,” says Gary Pinge, regional head of gaming research at the financial adviser Macquarie Group. “It says they’re sitting on the wrong side of the table.” And as any gambler knows, the tables can easily turn.

I find it hilarious that people in the States are horrified by the corruption and money laundering that is standard fare in most of the world. Step outside your nice Department of Justice bubble and see how the rest of us exist. Unless you want to sell fruit by the side of the road forever, the only way to make it is to grease the palms of corrupt, out of control politicos - or to hide money before they steal it. It's the sad reality of life in countries where the government is too powerful, not responsive to the people, and is run for the benefit of the people in charge. I hear lots of complaining about how corporations run the USA for their own benefit, and to an extent this is true. But it's nothing like the rest of the world. And in fact, the response of people who want to control these corporations' depredations by expanding regulatory oversight is only leading to the demise of the very level playing field they want to create. They want to expand the power of the government to shut down misdeeds by the corporations. Trouble is, the government you empower to control every little thing is the same government that can shut you down unless you pay off the right people. Today the man you appoint to run whatever new agency of government oversight may be clean and upright; but if the rest of the world is any indication, it never stays that way forever.

Twenty years is plenty of time to take their money and run. I only had two years on Margarita IslandVenezuela before the law changed and my casino was closed Eighteen more would have been nice. Two more years would have been ok also- ha